nep-dev New Economics Papers
on Development
Issue of 2019‒04‒22
ten papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. The (Lack of) Distortionary Effects of Proxy-Means Tests: Results from a Nationwide Experiment in Indonesia By Banerjee, Abhijit; Hanna, Rema; Olken, Benjamin A.; Sumarto, Sudarno
  2. Chinese aid and local ethnic identification By Isaksson, Ann-Sofie
  3. The complementarity of education and productive inputs among smallholder farmers in Africa By Kirui, Oliver Kiptoo
  4. Does microfinance have an impact on borrower's consumption patterns and women's empowerment? By Feldhoff, Charlotte H.; Liu, Yi; Feldhoff, Patricia R.
  5. Which Wheel Gets the Grease? Constituent Agency and Sub-national World Bank Aid Allocation By Samuel Brazys; Krishna Chaitanya Vadlamannati; Tianyang Song
  6. Explaining a ‘development miracle’: poverty reduction and human development in Malaysia since the 1970s By M Niaz Asadullah; Norma Mansor; Antonio Savoia
  7. Tax reform, public revenue and public revenue instability in developing countries: Does development aid matter? By Jean-François Brun; Sèna Kimm Gnangnon
  8. Boosting quality education with inclusive human development: Empirical evidence from Sub-Saharan Africa By Asongu, Simplice A; Odhiambo, Nicholas M
  9. Rethinking elite commitment to social protection in Ghana: Insights from an adapted political settlements approach By Abdul-Gafaru Abdulai
  10. Factors Influencing Informal Workers’ Participation in Health Insurance in Sudan: Evidence from Khartoum and Kassala States By Mohammed Elhaj Mustafa; Ebaidalla Mahjoub Ebaidalla

  1. By: Banerjee, Abhijit (Massachusetts Institute of Technology); Hanna, Rema (Harvard Kennedy School); Olken, Benjamin A. (Massachusetts Institute of Technology); Sumarto, Sudarno (TNP2K)
    Abstract: Many developing country governments determine eligibility for anti-poverty programs using censuses of household assets. Does this distort subsequent reporting of, or actual purchases of, those assets? We ran a nationwide experiment in Indonesia where, in randomly selected provinces, the government added questions on flat-screen televisions and cell-phone SIM cards to the targeting census administered to 25 million households. In a separate survey six months later, households in treated provinces report fewer televisions, though the effect dissipates thereafter. We find no change in actual television sales, or actual SIM card ownership, suggesting that consumption distortions are likely to be small.
    JEL: H31 I38 O12
    Date: 2018–12
  2. By: Isaksson, Ann-Sofie (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Recent empirical evidence suggests that Chinese development finance may be particularly prone to elite capture and patronage spending. If aid ends up in the pockets of political elites and their ethno-regional networks, this may exacerbate grievances based in horizontal inequalities. Against this background, the present study investigates whether the implementation of Chinese development projects fuels local ethnic identities. A new geo-referenced dataset on the subnational allocation of Chinese development finance projects to Africa over the 2000-2014 period is geographically matched with survey data for 94,954 respondents from 18 African countries. The identification strategy consists in comparing sites where a Chinese project was under implementation at the time of the interview, to sites where a Chinese project will appear subsequently but where implementation had not yet started at the time of the survey. While suggesting substantial country variation, the empirical results indeed suggest that, on average, living near an ongoing Chinese project fuels ethnic identification. I consider two mechanisms possibly underlying this result. First, competition for the inflow of resources that aid constitutes could mobilize ethnic identities across the board. Second, perceptions of ethnically biased aid may fuel ethnic identities in groups perceiving themselves as disadvantaged. Two observations speak in favour of the latter mechanism. First, the estimated effect is not uniform across groups, but driven by people belonging to the out-group. Second, there is no indication of an equivalent pattern when considering development projects of other donors. Replicating the key analysis for World Bank projects as well as for other bilateral donors, the results in fact indicate the reverse, i.e. that living near an ongoing as opposed to a future project comes with weaker ethnic identification.
    Keywords: China; aid; ethnic identities; Africa
    JEL: F35 O19 O55
    Date: 2019–04
  3. By: Kirui, Oliver Kiptoo
    Abstract: This study seeks to assess the complementarity of education and use of use of agricultural inputs–improved seeds, fertilizers, access to credit facilities (loans)), and the incremental effects of education on intermediate to longer-term economic outcomes (consumption expenditure and poverty) among smallholder farmers in four countries in SSA Africa (Ethiopia, Malawi, Nigeria and Tanzania). We apply a multinomial endogenous treatment model with education as our ‘treatment’ variable (variable of interest) with four possible levels (no-schooling, primary, secondary, post-secondary). The empirical model jointly estimates ‘treatment’ and selection effects and by this corrects for selection into one or the other education level. Using nationally representative LSMS panel data allows us to comprehensively assess the impact of education on the outcome variables. Overall results suggest that higher education (secondary and post-secondary level) significantly increases the use of improved seed varieties and fertilizers, access to credit services, and per capita consumption expenditure and consequently reduces household poverty. Specifically, findings suggests that post primary education (secondary and post-secondary levels) is by far the most important factor in use of productive inputs than mere introductory literacy and primary learning. For instance, having completed post-secondary education – compared to secondary level of education – increases access to credit services by 49% in Ethiopia, 41% in Nigeria and a whopping 126% in Tanzania. Similarly, completing secondary level of education (compared to primary level) would increase log per capita consumption expenditure by 14% in Ethiopia, 22% Malawi, 9% in Nigeria and 21% in Tanzania but completing tertiary level would further increase household per capita consumption expenditure by about 14% in Ethiopia, 20% in Malawi, 15% in Nigeria, and 45% in Tanzania. These findings augment the conclusion that schooling have positive impacts for the farmers and their households’ well-being. Our findings are of policy relevance to most SSA countries currently grappling with rising urbanization, high youth unemployment, and acute skills shortage.
    Keywords: Crop Production/Industries, Farm Management, Research and Development/Tech Change/Emerging Technologies
    Date: 2019–04–15
  4. By: Feldhoff, Charlotte H.; Liu, Yi; Feldhoff, Patricia R.
    Abstract: This paper conducts a thorough data analysis using cross-sectional data from a study carried out in Mexico including over 16,500 observations. In the study, clusters were selected in areas Compartamos Banco, a Microfinance institution (MFI), has not lent in before. The clusters were randomly assigned to either the treatment or the control group. The analysis suggests that Microfinance has a significant positive effect on school and food expenditure but no apparent effect on entrepreneurship. Using regression analysis, a significant positive effect on women's empowerment and its positive effect on total consumption is found.
    Keywords: microfinance,consumption patterns,women's empowerment,Mexico
    JEL: D14 G21 I15 I25 I31 J16 O12
    Date: 2019
  5. By: Samuel Brazys (School of Politics & International Relations, University College Dublin); Krishna Chaitanya Vadlamannati (School of Politics & International Relations, University College Dublin); Tianyang Song (School of Politics & International Relations, University College Dublin)
    Abstract: Questions of aid allocation have long focused on discerning the altruistic, self-interested or meritocratic motivation of development donors. Less attention has been paid to the interests and agency of recipient state governments and even less to the interests and agency of constituencies within those states. An implicit assumption is often that the “poor” either passively receive the patronage of their benefactors or they don’t. In this paper, we instead suggest that depending on the altruism/egoism of a donor, their sensitivity to needy subnational constituencies in aid allocation also depends on the political empowerment of those groups. In particular, we take advantage of the unique socio-cultural structure in India to examine if the political agency of scheduled castes and tribes (SC/STs) can explain patterns of district-level allocation of World Bank education aid. Using district-level data on a multi-year World Bank education program, district-level proportions of SC/STs and SC/ST population and of members of parliament, we find that SC/ST districts receive more aid, even when controlling for baseline poverty and educational performance. These results are especially strong when these districts are politically empowered. Our findings suggest that while donors may indeed respond to recipient needs, those recipients who also speak loudly for themselves fare better, highlighting the importance of constituent agency.
    Date: 2019–04–09
  6. By: M Niaz Asadullah; Norma Mansor; Antonio Savoia
    Abstract: This paper provides a systematic assessment of the alleged exceptionality of Malaysia’s development progress and its likely explanations, in a comparative perspective. Using cross-country regressions and aggregate indices of education, health, poverty and gender equality outcomes, we offer three findings. First, we provide evidence supporting the hypothesis that Malaysia’s human development progress has been exceptional compared with that of countries with a similar level of economic development, primarily for the 1970s and 1980s, so showing that progress has early origins. Next, we show that such progress is explained by a combination of income-mediated and support-led mechanisms, including Malaysia’s early emphasis on education and health inputs and infrastructure development. Finally, we argue that an early advantage in state capacity, vis-à-vis other countries of similar income level, may be at the origin of Malaysia’s successful implementation of poverty-reduction and growth-enhancing policies.
    Date: 2019
  7. By: Jean-François Brun (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Sèna Kimm Gnangnon (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper addresses two main questions concerning the relationship between tax reform, development aid, public revenue and public revenue instability in developing countries. Tax reform involves here a change in the tax structure in favour of domestic public revenue and at the expense of international trade tax revenue. The analysis uses an unbalanced panel dataset of 95 developing countries over the period 1981-2015, and the two-step system Generalized Methods of Moments approach. Empirical findings show that tax reform exerts a positive and significant effect on tax revenue-to-GDP ratio, with the magnitude of this positive effect increasing as the amount of development aid flows that accrue to developing countries increases. In addition, while tax reform exerts a reducing effect on tax revenue instability, the magnitude of this reducing effect diminishes as the degree of development aid volatility increases. Specifically, beyond a certain level of development aid volatility, tax reform enhances tax revenue instability. Overall, these findings suggest that a rise in development aid flows to developing countries should be accompanied by a lower aid volatility so as to ensure that tax reform would induce higher tax revenue while concomitantly reducing tax revenue instability in recipient-countries.
    Keywords: Tax reform,Public revenue,Public revenue instability,Development aid,Development aid volatility,Developing countries
    Date: 2019–03–09
  8. By: Asongu, Simplice A; Odhiambo, Nicholas M
    Abstract: This study examines the importance of inclusive human development in promoting education quality in a panel of forty-nine Sub-Saharan African countries for the period 2000-2012. The empirical evidence is based on Ordinary Least Squares (OLS), Fixed Effects (FE) and Quantile Regression (QR) estimations. It is apparent from the OLS and FE findings that inclusive human development has a negative effect on the outcome variable. This negative effect implies that inclusive human development improves education quality. This result should be understood in the light of the fact that the adopted education variable is a negative economic signal given that it is computed as the ratio of pupils to teachers. Therefore, a higher ratio reflects diminishing education quality. From QR, with the exception of the highest quantile, the tendency of inclusive human development in reducing poor quality education is consistent throughout the conditional distribution of poor education quality. Policy implications are discussed.
    Keywords: Education; inclusive human development; Africa
    Date: 2019–04
  9. By: Abdul-Gafaru Abdulai
    Abstract: This paper explores the political economy drivers of Ghana’s flagship cash transfer programme, Livelihood Empowerment Against Poverty (LEAP). In contrast to existing accounts of the LEAP as a domestically driven cash transfer scheme, the evidence here shows that donor pressures, leveraged through financing, played a more prominent role than the paradigmatic ideas of domestic political elites in shaping the adoption of the LEAP. Despite the recent discovery of oil and the country’s subsequent ascension to middle-income status, donors remain important players in the Ghanaian political economy, given their dominance in the investment component of government’s budget and the resultant inability of political elites to generate the rents that are so badly needed for meeting various redistributive demands without donor financing. However, once the LEAP was adopted, domestic political calculations and the incentives generated by Ghana’s political settlement dynamics took centre stage in shaping the actual implementation of the programme, especially around questions of targeting and geographical coverage, and the prioritisation of reforms with more visible impact that could be leveraged upon to win competitive elections. These findings suggest that an adapted political settlements framework that goes beyond domestic political calculus, and which explicitly incorporates the influence of ideational and transnational factors, can greatly improve our understanding of the political economy drivers of social protection in Africa.
    Date: 2018
  10. By: Mohammed Elhaj Mustafa (University of Kassala); Ebaidalla Mahjoub Ebaidalla
    Abstract: This study investigates the factors that influence the participation of the informal workers in health insurance program in two Sudanese states, namely, Kassala and Khartoum. To this end, the study relies on primary data collected from 742 informal workers in these two states. Both qualitative and quantitative techniques have beenadopted to carry out the intended investigation. The analysis indicates that factors such as respondent’ age, wealth status, chronic disease status, morbidity, health insurance awareness, health-seeking behavior and proximity to health care facilities arethe most significant factors affecting informal workers’ engagement in health insurance system. The result also reveals that being residing in urban areas lowers the probability of joining health insurance membership in the full, Kassala and Khartoum samples. Both monetary income and average years of schooling are found to contribute positively in raising the likelihood of voluntary enrollment in health insurance. These findings still hold under different robustness checks, confirming the existence of barriers that prevent a huge portion of the informal workers from voluntary enrollment in health insurance. Finally, the paper ends with some recommendations aimedat enhancing the role of NHIF in accommodating the informal workers and achieving universal health coverage.
    Date: 2019

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